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SCAN INSIGHT
Quarter 1 | April 2018
2018 is moving along pretty fast. It’s hard to believe we are nearing the end of the first quarter
already. We have had a very busy first quarter at SCAN. We were able to conduct our Member’s
meeting on February 6th where we had CBP as a special guest. SCAN was mentioned as a best
practice at an ICPA event in one of the breakout sessions. All great ways for us to get the word out
about the great benefits to being a member.
There is a great deal of things happening with CTPAT, including the upcoming minimum security
criteria (MSC) rewrite. Our board of directors and audit committee have been discussing the best
way for SCAN to be ready it. As a member of SCAN, you can be sure we will implement the new
requirements into our program in a very short time period. We anticipate that many of the new
requirements are already a part of our program as “shoulds”.
I don’t want to imply that we won’t have some work to do. However, SCAN’s rigorous program will
put us in a great place. Leveraging SCAN and the systems we have available will reduce the effort
required by each individual company in incorporating these new standards in their security
programs.
I would like to take this opportunity to invite our members to help us continue to create a great
association that works hard for our members. The best way to do this is by joining one of our
committees. We have both committee chair and board of directors positions open. Having your voice
heard in the association is the best way to build SCAN to help your company. Get involved and let us
hear from you.
As a SCAN member, you will always have an advantage. In the fight against terrorism and ensuring
cargo security, we are all in this together.
Kendra Hobbs
SCAN Chairman
MESSAGE FROM THE BOARD CHAIR
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EXECUTIVE SUMMARY
The Open Members meeting on February 6th
included special guest Liz Schmelzinger, Director
of CTPAT. Schmelzinger reinforced CBP’s support
of SCAN as a best practice. Schmelzinger also
provided a sneak peek at the Minimum Security
Criteria (MSC) rewrite. More information about the
MSC rewrite can be found on SCAN’s Website.
Members represented SCAN at this year’s ICPA
conference in March. Dan Purtell of BSI provided
an educational presentation on SCAN while Beth
Unger shared Columbia’s experience as a SCAN
member. SCAN also had a table at the conference
where Ryan Klath of Target and Renee Tulloch of
BSI demonstrated how SCM works and shared the
benefits of SCAN.
Reaudit Training has begun for service providers.
As SCAN begins to lead the reaudit process for
SCAN audits, service providers will play a role in
recognizing factories’ compliance with previous
audits and CAPAs.
The SCAN Association wants to ensure that the
SCAN Audit Repository hold valid audits for its
members and factories. This approach allows
members to reduce their workload and helps the
association continuously maintain valid audits
without relying on its members to trigger audits. On
April 10th, SCAN began a pilot of 60 re-audits
ordered on behalf of the SCAN Association.
Further information regarding the re-audit process
can be found in the audit committee update
section of this newsletter.
IN THIS ISSUE:
Q1 Stats 4
Audit Committee Update 5
Factory Spotlight 6
Factory FAQs 7
Country Risk Highlight: China 8
SCAN Member Testimonial: Meijer 9
SCAN BOD & Committee 10
Potential SCAN Member FAQs 10
Become a Member 11
CONNECT WITH SCAN:
www.scanassociation.com
Supplier Compliance Audit
Network (SCAN)
UPCOMING EVENTS:
June 5th, 2018
SCAN Member Meeting
Watch your inbox for meeting invitation
and agenda
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27 SCAN Members
QUARTER 1 STATISTICS
In combined annual revenue
between the membership
$935 Billion The SCAN membership includes some of the top
fortune 500 industry leaders. These organizations
have added 12,844 to the SCAN Audit Repository,
allowing members and factories to benefit from
shared audits. We would like to welcome SCAN’s
newest member PriceSmart.
Representing Multiple
Industries: Retail, Apparel,
Food and Sporting Goods.
2,243
12,844
41% of the conducted audits are shared by more than one SCAN
Member. The shared audits have increased by 3% since Q4 2017.
19% of factories in the SCAN Audit Repository are shared by more than
one SCAN member.
In Q1, audits were conducted in 23 countries. The most audited
countries during that quarter were China, India, Bangladesh, Vietnam,
and the United States of America.
Active Factories
Shared Audits
5,501 Conducted Audits
China – 65% India – 7% Bangladesh – 6% Vietnam – 6% USA – 4%
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AUDIT COMMITTEE UPDATE
Ken McElroy | Manager Global Trade Risk & Export Compliance | The Home Depot
In an effort to better serve our membership, the SCAN Association has implemented a new re-audit
process which began on April 10th. This process ensures that audits in the SCAN Audit Repository
are valid, and will benefit both our members and factories. Factories that have already been audited
in the SCAN Program will now be audited every year or every two years based on the criteria below.
Each member has the right to request a re-audit at any time due to member risk tolerances.
Factories’ country risk will be reviewed every quarter by SCAN Program Management to determine if
there is a change to audit cycle. If the re-audit cycle has changed, an email will be sent from SCM to
notify the factory.
The SCAN Program Management team may be in contact with SCAN Members that share factories
when assistance is needed. Your support in the re-audit process is crucial to the success of the
program.
Reaudit every
2 years
Audit score equal to or greater than 75%,
and
Country risk is
Low, Guarded, or Elevated,
and
CAPA process was completed
Reaudit every year
Audit score less than 75% and
country risk is Low, Guarded, or Elevated,
or
Country risk is
High or Severe,
or
CAPA process was not completed
(CAPA Incomplete substatus in SCM)
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FACTORY SPOTLIGHT
A SCAN factory in China’s Guangdong Province provided comments following his experience with a recent SCAN audit shared with another SCAN member:
“Thanks for the nice help on security compliance management in our supply chain. We did take it as
a practical tool to evaluate the security performance of our factory and to exempt various audits from
different customers on security compliance. And we always hope SCAN could invite more and more
Retailers/Customers/Brands join in the program as a SCAN member.”
By participating in the SCAN Program, factories are given a standardized corrective action plan for
consistent factory improvement expectations. The corrective action process allows factories to make
the recommended changes in order to help improve SCAN members’ results while improving the
security at their facilities.
SCAN’s audit statistics illustrate advancement towards facility security improvements and effectiveness of the shared audit concept.
5,486Total completed SCAN Audits
34,409Total completed
CAPAs
89%Pre-CAPA compliance score
96%Post-CAPA compliance
score
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FACTORY FAQS SCAN has received many questions from factories regarding the SCAN audit process. A list of the
most frequently asked questions are compiled here. If you are receiving similar inquiries, refer to
these FAQs to aid in answering factories’ questions.
1. How can we apply for a SCAN audit?
Currently, SCAN only accepts audit requests initiated by SCAN members. If you want to apply for
a SCAN audit, please contact one of our SCAN members for assistance. In the future, SCAN is
committed to develop a factory/ supplier level in the SCM platform allowing factories/suppliers to
order audits directly.
2. Where can we get the audit result?
Your audit results can be viewed in the SCM portal. When your audit is scheduled, you are sent
an invitation email to setup your SCM portal. Within 10 days of the conducted audit, you will be
notified that your audit results are available to view and download in the portal.
3. What should we do before/after the audit to help improve our supply chain security?
Pre-Audit: You can ask for a copy of SCAN Pre-Audit Checklist from the audit firm in advance to
prepare the required documentary files such as procedures & records of implementation.
Post-Audit: Complete the corrective actions assigned to you after the audit. By completing the
corrective actions, you have the ability to improve your score.
4. Is it necessary to us to complete the CAPAs?
The answer will always be YES. The CAPA process offers you an additional opportunity to have
your compliance score improved. SCAN is a shared audit program allowing SCAN members to
access your audit report. It is imperative for you to complete CAPAs assigned to you in the SCM
portal in order to show your efforts in helping reduce risk in the supply chain for SCAN members.
Audit results and CAPA completion are factors in determining when your next audit will take
place.
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SCAN COUNTRY RISK HIGHLIGHT: CHINA
SCAN’s risk-based audit approach uses
BSI’s SCREEN Intelligence to incorporate
geographical threats as part of the supplier
risk assessment. SCAN’s approach has
been noted by CTPAT as an industry best
practice and uses three risk variables to
quantify local threats:
1. Unmanifested Cargo Introduction
2. Anti-Western Terrorism, and
3. Supply Chain Terrorism
The threat of cargo disruption in China is
Elevated. While cargo thieves occasionally engage in partial and whole shipment theft, pilferage of
goods from cargo trucks and warehouses is more common. The production and exportation of
counterfeit goods in China are great concerns to companies, as the country has seen little progress
in the enforcement of Intellectual Property Rights (IPR) legal protections.
China has a High threat for illegal drug
introduction into legitimate cargo shipments.
China has witnessed an increased demand
in the production of synthetic drugs, and
traffickers have been known to introduce illicit
drugs into exported freight.
The threat of anti-Western Terrorism in China
is Guarded. The majority of China’s terrorist
activity occurs in the northwestern region of
the country.
The threat of supply chain terrorism in China
is Low. While occasional bombing attacks from these groups could cause potential disruptions to
the local supply chain, such incidents are rare in China.
4,039SCAN audits conducted in
China since program inception
73%China's portion of total SCAN
audits conducted since program inception
89%Average SCAN compliance
score in China
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SCAN MEMBER TESTIMONIAL
Holly Clouse | Customs Compliance Manager | Meijer
The Supplier Compliance Audit Network (SCAN) was
first introduced to us by one of our suppliers. As we investigated the program and
spoke with other suppliers, we found they supported the idea of a shared audit
platform.
SCAN has been able to standardize the format and content of supply chain
security audits, while providing a method of sharing results and limiting the number
of audits our foreign business partners are required to undergo. This has been a big win for us and
our suppliers as the SCAN repository allows us to easily assess the onsite audit, and quickly make
our risk assessments.
The shared audit platform has grown faster than we had expected and provides quick access to the
audit results. As our supply chain has to adjust to market trends rapidly, SCAN allows us to save
time and focus our attention on serving our customers. As more and more companies join SCAN,
the audit repository will only continue to grow, further saving us and our suppliers’ time and money.
SCAN BOARD OF DIRECTORS AND COMMITTEE CHAIRMEN
Board Chair
Kendra Hobbs | The Home Depot
Vice Chair
Lisa Schulte | Target
Treasurer
Pat Cerisano | Husky Injection Molding
Secretary
Jennifer Kissner | Newell Brands
Committee Chair: Audit
Ken McElroy | The Home Depot
Committee Chair: IT
Beth Unger | Columbia Sportswear
Committee Chair: Marketing/PR
Ryan Klath | Target
Committee Chair: MembershipYvettee Estrada | JC Penney
Committee Chair:
Service ProvidersOpen
Member-at-LargeHolly Clouse | Meijer
Member-at-LargeStella Bray-Conrad | Walmart
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POTENTIAL SCAN MEMBER FAQS
Are you thinking about becoming a SCAN member, or know a company that is? SCAN compiled a
list of frequently asked questions regarding membership and its benefits. Take a look at what SCAN
membership offers below!
Why should I become a member?
The SCAN Association is a nonprofit shared audit program which allows members to share supply
chain security audits. SCAN eliminates audit fatigue at the supplier level and allows members to
reduce costs in their supply chain.
By joining the SCAN Association, you become a partner with other supply chain security thought
leaders. You may compete on the shelves but, collectively as SCAN Members, you share a common
goal to secure the global supply chain.
In April 2018, SCAN will be automatically re-auditing factories on a year or two year basis depending
on the compliance score and risk of the country the factory is located. This process will allow
members to save more time, effort, and will result in reduced supply chain costs.
What kind of benefits will the SCAN Association give me?
Confidential method to share audit results
Consistent and fully managed corrective action plan
SCAN Audit criteria aligns with future CTPAT rewrite
Risk based audit approach
Customized audit management platform SCM Supplier Compliance Manager
Ability to reduce resources dedicated to your audit program
What is included in the SCAN membership?
• Training for your selected users on SCAN Processes & SCAN Audit Repository
• Access to the SCAN Audit Repository to search for factories and audits
• An onboarding package which includes:
o a SCAN letter to be sent to your factories to explain the SCAN Program and your
participation in SCAN
o your factories researched to identify shared factories and audits available in the SCAN
Audit Repository
• Standardized corrective action process managed by SCAN
• Quarterly SCAN Insight Newsletter
• Potential to be a SCAN committee member to help drive strategy in SCAN Association
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How do I know if my supplier has conducted a SCAN audit?
• You are given access to the SCAN Audit Repository where you have the ability to search by the
factory’s unique SCAN ID or by entering the country and the first 5 characters of the factory name
• During onboarding, you have the opportunity to have your factory list crossed checked against
existing factories and audits in the SCAN Audit Repository
• When communicating with your factories, you can ask them to share their SCAN ID if they have
conducted a SCAN audit to help you locate their audit in the SCAN Audit Repository
How should I incorporate SCAN in my supply chain?
• Discuss the program internally to determine if the SCAN is right for your company. Reach out to
[email protected] for more information
• When becoming a member, ensure to utilize the resources provided in your onboarding package.
Send the SCAN letter to your factories to explain the program and expectations.
• Review audits that you share and determine if you can accept the audit to help reduce audit
fatigue at your factories
• Begin by ordering a small number of audits to help get familiar with the process
• Make updates to your internal processes accordingly and move out of your pilot program
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BECOME A MEMBER! Join various industry leaders, such as the members listed below, in becoming an official SCAN
Member! Contact to learn more about the association, membership options, and the shared audit
repository! Contact us at [email protected].
Associated Premium
Barnes & Noble, Inc.
Cabela’s
Canadian Tire
Carter’s, Inc.
Coleman Company, Inc.
Columbia Sportswear Company
Costco
Hallmark Cards, Incorporated
Husky Injection Molding Systems
Jarden
JCPenney
Kroger
Levi Strauss & Co
Meijer, Inc.
Michaels
Patagonia, Inc.
PriceSmart
Rawlings Sporting Goods Company
Renfro Corporation
Revman International
RMS International
Target
The Home Depot, Inc.
Walmart
Wolverine Worldwide
Visit our website to learn more about the SCAN Association, www.scanassociation.com
SCAN Anti-Trust Statement
Our association understands the importance of anti-trust compliance. Our goal is to avoid the appearance
of impropriety. We make every effort to avoid any discussion of prices, pricing policies, terms and
conditions of doing business, or, of course, any sort of market allocation. We also avoid any discussion
that might be perceived as suggesting that anyone should cease doing business with a particular factory
or customer, or any other discussion that might be viewed as coercive or exclusionary toward another
company.
We encourage our members, should they feel uncomfortable about any subject of discussion or have any
questions, to please speak up and bring their concerns to the attention of any board member, who will
stop the conversation until we can provide legal guidance.
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